Heseltine heads China visit

Russell Hotten and Teresa Poole in Peking on what links can be built with the world's most populated nation

In the first Cabinet-level visit to China for three years, Michael Heseltine arrives in Peking tomorrow at the head of the biggest British trade mission to that country.

With 150 businessmen in tow, the President of the Board of Trade will be hoping that the apparent improvement in Sino-British relations will help knock a hole in the trade deficit with China, which last year stood at nearly £800m.

Details of several important contracts are due to be unveiled during the week-long visit, including a $100m joint venture by Bass to expand its brewing interest and a telecoms deal by GPT.

But while the Department of Trade and Industry was especially keen to emphasise the trade aspects of the visit, sources did not reject the suggestion that discussions about the future may also crop up.

The Peking government has been publicising the visit as a sign of a big improvement in political relations between the two countries. Finalisation of Mr Heseltine's visit contrasts with difficulties last October, when a planned trip by Richard Needham, the Trade Minister, was thwarted by China's inability to "agree dates".

Peking now appears to be drawing a line between the continuing row over Hong Kong's political future and trade matters. Mr Heseltine is due to hold a meeting with Li Peng, the Chinese Prime Minister, on Monday.

The visit will not be able to match the flamboyant trade missions to China over the past year or so by the United States, Germany, France and Canada, during which commercial envoys have laid claim to billions of dollars' worth of contracts, joint ventures and letters of intent. The British trade mission to Peking, Shanghai and Guangzhou will be a more low-key affair.

Companies going on the visit include British Gas, Lucas, Rolls-Royce, British Telecommunications and a string of other big organisations across all sectors of industry.

British companies have been increasingly active in China, and companies now opening offices there include British Nuclear Fuels, BT, TI Group and Zeneca.

While British exports to China lag behind those of other European nations, neither the row over Hong Kong nor political uncertainties on the mainland has held back British direct investment.

According to Chinese statistics, the UK had utilised investment of US$578m in China by the end of 1993, heading the league of European investors. There are now more than 600 British joint ventures in China.

It is understood that Mr Heseltine will also be pushing the Chinese government on Britain's request to open a consulate in the southern city of Guangzhou to handle mainly trade-related matters. The idea was put forward last July, but is still "under study" by Peking.